Use of Arbitration Increased in 2003

The use of arbitration by property/casualty insurance companies and self-insureds to resolve inter-company claims disputes increased by nearly 8 percent in 2003, with the number of arbitration filings increasing to more than 434,000, according to Tampa, Fla.-based Arbitration Forums Inc. (AF).

AF, the nation’s largest nonprofit provider of inter-insurance dispute resolution services, resolved more than $1.8 billion in inter-company claims disputes in 2003, D. Kay Smith, chief executive officer of AF, said.

The number of arbitration filings in 2003 grew, increasing to more than 434,000, an increase of more than 8 percent from 2002.

Smith noted that the increase in arbitration filings could be attributed, in part, to the ease of use of the Internet and e-mail to further speed the arbitration process. The new E-Speed Filing Program at AF offers high-speed electronic filing for small-dollar auto liability and damage disputes.

New Web-based training programs also are helping a growing number of subrogation professionals become more aware of how to use arbitration effectively and enhance their recoveries, she observed.

Disputes leading to arbitration typically arise when insurance or self-insured companies believe their insureds are not at fault or if they disagree as to the percentage of liability or the amount of damages, Smith explained. More than 80 percent of inter-company arbitration disputes involve auto collisions.

“Insurance companies and self-insureds are saving an increasing number of expense dollars by choosing arbitration over litigation as the means of resolving property and casualty claims,” she said.

An AF study found that for every dollar a company spends on inter-company arbitration, the return on investment in 2003 was $38.00, she said.

“The heightened company focus on saving expense dollars coupled with the ease of electronic filing and an increased understanding of the benefits of arbitration programs should generate even more growth in the future,” Smith said.